Marketaxess Holdings, Inc. · NASDAQ:MKTX
Marketaxess — Q3 2020 Earnings Presentation
15 slides from Marketaxess's earnings presentation, Oct 27, 2020
Slide 1: Q3 2020 Conference Call and Webcast
Q3 2020 Conference Call and Webcast October 27, 2020
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward-looking statements, including statements about the outlook and prospects for Company and industry growth, as well as statements about the Company’s future financial and operating performance. These and other statements that relate to f
Slide 3: 3Q20 Summary
3Q20 Summary1 FINANCIAL HIGHLIGHTS BUSINESS HIGHLIGHTS • Revenues of $164 million, up 25% • Total credit trading volume of $589 billion, up 14% • Record estimated U.S. high-grade market share of 22.2%, • Operating income of $88 million, up 33% up from 20.2% • Operating margin of 53.5%, up from 50.1%
Slide 4: Market Conditions
Market Conditions LIQUID U.S. CORPORATE INDEX (LUCI) U.S. HIGH-GRADE & HIGH-YIELD TRACE VOLUME 2.5% Q3 YoY AND ESTIMATED MARKET SHARE Market Share Benchmark Spread 3 Month Rolling Spread Volatility HG TRACE Volume HY TRACE Volume Increase 330 12.2% Combined HG and HY Market Share Benchmark Spread (b
Slide 5: Open Trading
Open Trading™ HIGHLIGHTS DEALER VS. CLIENT INITIATED OPEN TRADING 41% Q3 YoY • $3.1 billion average daily volume, up 40% from 3Q19 VOLUME Growth Dealer: 37% Client Initiated Volume Dealer Initiated Volume • Open Trading credit revenue of $40 million, up 53% from 3Q19 Client: 43% 300 • Estimated syst
Slide 6: Trading Automation Continues to Grow
Trading Automation Continues to Grow HIGHLIGHTS AUTO-X TRADE VOLUME AND COUNT Q3 YoY Growth Trade Volume: 34% • Over 158,000 trades completed using automated Trade Volume Trade Count Trade Count: 37% execution, up from 115,000 trades in 3Q19 35,000 180 Trade Count (in thousands) Trade Volume ($ mill
Slide 7: New Initiatives and Product Expansion
New Initiatives and Product Expansion NEW PRODUCT INITIATIVES MUNICIPAL BONDS • Live Markets • Over 300 active investor clients and $44 million in ADV, up – Live order book to complement RFQ protocol, focusing 25% from a year ago on newly issued and other liquid corporate bonds • MuniBrokers system
Slide 8: Quarterly Volume Growth and Estimated Market Share
Quarterly Volume Growth TOTAL CREDIT 14% U.S. HIGH-GRADE 17% Q3 YoY Growth U.S. High-Grade Volume Market Share Q3 YoY Growth 800 450 23% 700 400 22% Estimated Market Share 350 600 21% Volume ($ billions) 300 500 20% $ billions 250 400 200 19% 300 150 18% 200 100 100 50 17% -- -- 16% 1Q18 2Q18 3Q18 4
Slide 9: Earnings Performance
Earnings Performance %Δ 3Q20 vs. 3Q20 2Q20 3Q19 3Q19 ($ in thousands, except per share data) Revenues Commissions $ 150,586 $ 172,092 $ 119,869 25.6% Information Services 8,501 8,427 7,693 10.5% Post-trade Services 4,689 4,054 3,784 23.9% Other Income 230 222 251 (8.4%) Total Revenues 164,006 184,79
Slide 10: Commission Revenue Detail
Commission Revenue Detail %Δ 3Q20 vs. 3Q20 2Q20 3Q19 3Q19 Commissions ($ in thousands) Transaction Fees U.S. High-Grade $ 60,861 $ 75,208 $ 45,409 34.0% 1 Other Credit 59,131 66,977 50,009 18.2% Total Credit 119,992 142,185 95,418 25.8% Rates2 3,191 3,846 567 462.8% Total Transaction Fees 123,183 14
Slide 11: Expense Detail
Expense Detail %Δ 3Q20 vs. 3Q201 2Q20 1 3Q19 3Q19 ($ in thousands) Expenses Employee Compensation and Benefits $ 37,583 $ 41,636 $ 32,681 15.0% Depreciation and Amortization 9,032 8,305 6,700 34.8% Technology and Communications 8,417 8,592 7,381 14.0% Professional and Consulting 8,269 8,065 7,018 17
Slide 12: Balance Sheet Data
Balance Sheet Data TTM FREE CASH FLOW AND CAPITAL ($ in thousands) 9/30/2020 12/31/2019 EXPENDITURES 2 44% YoY TTM FCF Growth Assets TTM Free Cash Flow TTM Capital Expenditures 400 100 TTM Capital Expenditures ($ millions) Cash, Cash Equivalents and Investments $ 341,642 $ 500,601 TTM Free Cash Flow
Slide 13: Summary
Summary • Strong market share gains in core products driving revenue and earnings growth • New product opportunities emerging to expand and diversify revenue • Bolt-on acquisitions extend product capabilities and add important clients • Trading automation and Open Trading create the path to new live
Slide 14: Now you're in the market
\Y, aN Now you're in the market”
Slide 15: Disclosures
Disclosures ©2020 MarketAxess Holding Inc. (the "Company"). MarketAxess Corporation and LiquidityEdge LLC are members of FINRA and SIPC. MarketAxess Canada Company is a member of IIROC. MarketAxess Europe Limited (04017160), MarketAxess Capital Limited (09777893), and Xtrakter Limited (01917944) are